Indian markets faced significant pressure on Thursday, with Sensex declining 240.81 points (0.31%) to 77,242.13 and Nifty 50 falling 54.50 points (0.23%) to 24,153.25 as of 12:30 PM. The weakness was primarily driven by selling in cement, FMCG and PSU bank stocks, with cement sector stocks weighing heavily on market sentiment. As per CNBC TV18, the cement industry faces near-term headwinds with cement realisations expected to decline 1-1.5% sequentially in Q2FY27 (July-September 2026) and EBITDA per tonne falling by ₹200-250 sequentially due to higher fuel costs of ₹100-115 per tonne impact.
Navin Sahadeo, Analyst at ICICI Securities, has identified Grasim Industries as his preferred cement sector investment despite broader industry challenges. According to reports from CNBC TV18, Sahadeo's primary argument centers on the continued high dividends from UltraTech Cement, which will benefit Grasim through either reduced leverage or deployment in other high-growth businesses. The analyst has cut the holding-company discount from the historical 40-50% range to 25%, resulting in a target price of ₹4,175 with 27% upside potential from current levels.
The cement industry faces significant near-term headwinds, with cement realisations expected to decline 1-1.5% sequentially in Q2FY27 (July-September 2026). As reported by CNBC TV18, Sahadeo expects EBITDA per tonne to fall by ₹200-250 sequentially due to higher fuel costs of ₹100-115 per tonne impact and weaker volumes. Recent price increases in south India are primarily aimed at preventing further price declines rather than delivering meaningful improvement in realisations. The analyst notes that Q2 typically faces negative impact from operating leverage due to lower seasonal volumes.
Beyond cement operations, Sahadeo expects Grasim's paints and B2B e-commerce businesses to move towards break-even, with the B2B e-commerce segment potentially reaching this milestone earlier. According to CNBC TV18, these diversified businesses provide additional revenue streams and growth opportunities that complement the core cement operations. The analyst suggests that investors who remain positive on cement can consider playing the sector through Grasim's diversified portfolio.
Cement demand growth is expected to remain modest at 6-7% for the year, with Sahadeo noting that actual demand growth between 2010-11 (FY11) and 2025-26 (FY26) was only about 5.5% compound annual growth rate (CAGR). As reported by CNBC TV18, despite repeated expectations of 7-8% annual growth, the industry has consistently underperformed these projections. The analyst expects profitability to improve in the second half as demand picks up, but the full-year picture is likely to remain largely flat with industry EBITDA per tonne potentially flat or rising only marginally year-on-year.
